Most transfers (sales) of real estate trigger reassessment of the property by the county assessor, which usually means an increase in property taxes. Will transferring your house into your Trust trigger a reassessment and then higher property taxes?
TRANSFER TO TRUST
Transferring your house into your Trust should not raise your property taxes because the county assessor should not reassess your property just because the property has been transferred to your Trust. If your property taxes increase more than 2% after your house has been transferred to your Trust, call your local county assessor to see why the taxes increased.
TRANSFER TO CHILDREN ON DEATH
Before Proposition 19 took effect on February 16, 2021, transferring real estate from parents to children (and sometimes from grandparents to grandchildren) would not trigger an increase in property taxes. However, Proposition 19 changed the rules.
Under Proposition 19, the assessed value of real estate will be adjusted to current values when the real estate is transferred, regardless of whom it is transferred to unless all three of these things are true:
1. The property is transferred from parent to child.
2. The property was the parent’s residence at the time of their death.
3. The property will be the child’s residence after the parent’s death.
If all three factors are met, the property will not be reassessed up to an assessed value of $1,000,000. Anything over an assessed value of $1,000,000 will be reassessed to current values.
If the parent died before February 16, 2021 but the deed was not recorded until after February 16, 2021, the old rules will still apply.
For property tax purposes, it does not matter whether the real estate is in a Trust or not. The same rules apply regardless of whether the property is held in an individual’s name or in the individual’s Trust.
There have been some challenges to this Proposition and some calls to reverse it. For now, Proposition 19 is still in effect, but that may change in the future.
So, when you transfer your own property into your Trust, your property taxes should not increase. When your Trustee transfers your property to your loved ones, their property taxes may increase.
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